Dream Industrial Real Estate Investment Trust T.DIR.UN

Alternate Symbol(s): DREUF

Dream Industrial Real Estate Investment Trust is a Canada-based open-ended real estate investment trust. The Company owns, manages and operates a portfolio of 339 assets totaling approximately 71.9 million square feet of gross leasable area in key markets across Canada, Europe and the United States. The Company owns and operates a diversified portfolio of distribution, urban logistics and light industrial properties across key markets in Canada, Europe and the United States. Across its regions, its portfolio consists of distribution, urban logistics and light industrial buildings: distribution buildings, urban logistics buildings and light industrial buildings. The Company’s properties include Trillium Industrial Business Park, West Mall Cluster, Kennedy/Coopers Avenue Cluster, Terrebonne Cluster, Boucherville Cluster, Sunridge Park, Chestermere Industrial Park, Zac de Satolas Green, 310 Hoffer Drive (McDonald Business Centre), among others.

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Post by retiredcfon Dec 16, 2020 11:01am

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Post# 32118430

TD Upgrade

They raised their target by a buck to $14.50. GLTA

Dream Industrial REIT

(DIR.UN-T) C$13.13

DIR Locks-in 0.49% Rate on Inaugural Unsecured Debenture Event

Dream Industrial REIT announced that it will issue $250mm of five-year, Series A Unsecured Debentures with a historically low coupon of just 1.662%. DIR has further reduced the effective interest rate to just 0.489% through the use of a cross-currency interest rate swap. Closing is scheduled for December 22.

Impact: SLIGHTLY POSITIVE

Estimates Raised on Reduced Debt Costs: The 0.489% effective rate on the new $250mm debenture enables DIR to reduce overall interest costs while pre- funding the debt capital required to complete acquisitions and reach its targeted leverage ratio in the +/-35%-range. We forecast $180mm of acquisitions in 2021 and $40mm in 2022. We also expect a portion of the proceeds to be used to retire 2021 mortgage maturities totalling $133mm that currently carry a significantly higher average interest rate of 3.9%. The net effect is a 3-4% rise in our 2021-2022 FFO and AFFO estimates. Our new 2022E AFFO estimate implies a 14% two-year CAGR.
Enhanced Liquidity: We estimate that Q4/20 pro forma cash (net of completed acquisitions) will exceed $300mm, and the ~$320mm (US$250mm) credit facility will be completely undrawn.

Acquisitions Update: DIR has completed €31mm (C$48mm) of acquisitions since Q3/20 at an average 6.0% going-in cap rate (see page 2), and has an additional $300mm in advanced negotiations.

TD Investment Conclusion

Leasing and investment activity continue to accelerate across DIR's markets, buffered by increased demand emanating from the various impacts of COVID-19 (e- commerce penetration and changes in inventory/supply chain management). DIR is uniquely positioned with high relative exposure to urban in-fill logistics properties (~40% of FV) that increasingly cater to last-mile distribution and benefit from the lack of new competing supply.

2020 has been a transformational year for DIR by meeting its leverage-reduction goals, expanding into The Netherlands & Germany, completing nearly $600mm of acquisitions, issuing its inaugural unsecured debenture, and sharply reducing overall debt costs. Despite this, DIR is one of relatively few industrial REITs not to see its trading valuation recover to pre-pandemic levels. Our increased target price reflects a combination of higher estimates and increased cash-flow visibility.